Highmark seeks growth, but not into Philadelphia

This was supposed to be a crowning week for Kenneth R. Melani, chief executive officer of Highmark Inc., Pittsburgh's largest health insurance company.

But instead of putting the finishing touches on the long-sought merger between Highmark and Philadelphia's Independence Blue Cross, Melani will be in Tampa, Fla., to cheer the Pittsburgh Steelers at the Super Bowl.

"I have a little bit of free time on my hands," Melani said last week, a touch ruefully.

On Jan. 21, the companies decided jointly to pull their merger application, spiking the deal before the state's Insurance Department could do so.

Like Independence Blue Cross, Highmark is now forced to refocus its energy after spending so much of it on a merger that was not meant to be.

Part of that focus will be directed toward the new presidential administration, and the expectation of sweeping changes within the health-care and health insurance industries, Melani said.

Highmark will also continue to look for acquisition opportunities when they make sense, expanding the company's geographic footprint by buying smaller, for-profit medical-services companies.

But, he said, Highmark's growth plans do not include a foray into Southeastern Pennsylvania, to compete with Independence Blue Cross.

"We don't intend to go into the Philadelphia region," Melani said.

Critics of the merger plan, including Insurance Commissioner Joel Ario, had said that policyholders would be better served if the two companies competed against each other.

Despite the discouraging judgment from the Insurance Department and the governor's office, Melani said he would not rule out another merger attempt with Independence Blue Cross.

"If the environment changes in some way significantly, we'll do it again, because it made sense," he said.